Most major donors have the vast majority of their wealth in assets, not cash. In fact, for many of your church’s most generous donors, less than 10 percent of their wealth is likely to be in cash assets. So what does that mean for our fundraising efforts?
Unfortunately, we see many churches and ministries that do not communicate to or educate donors about how to give with anything other than traditional cash.
In this blog series, we’re exploring creative online giving tools for churches. We’re unpacked what churches need to know about cryptocurrency, and today we’ll look at how you can support donors who want to give of their non-cash assets. I’ll also close by giving you some critical information for this tax year about cash gifts, so keep reading.
Let’s start with the more simple donation instruments: property and real estate. Often, there are tax benefits to the donor when he or she donates property (car, land, rental home) to the church rather than selling it and then donating cash proceeds. A donor who no longer wishes to maintain a second home or rental property will likely incur high capital gains taxes when selling it, which also cuts into what he or she can donate from the sale. Donating the property to their church or a nonprofit charity eliminates those tax implications, creates tax and other benefits for the donor, and allows the church to hold or sell the property based on ministry needs.
Many donors do not think of this as an option when they reach the point of wishing to offload acreage, a rental property or an inherited home. Pastors, look for ways to let your congregation know that there are impactful church contributions they can make to the church through gifts of real estate.
Similar to the reasons to donate property rather than sell, gifts of appreciated stock given directly to a church or charity also have tax benefits for the donor. Donors can make a larger impact by not selling off stock and contributing the cash, and instead donating the shares to the church. Most charities sell stock gifts for cash upon receipt. In most cases, your financial institution (or your religious or community foundation) have staff who can assist your church in understanding and accepting stock gifts.
Pastors, look for ways to communicate to your congregation that stocks are an easy way to generously support your church’s ministry. If you have a donor who has donated stock, ask him or her to share their story as it will inspire, educate and encourage others to look at their portfolios through the lens of generous giving.
For those in your congregation who hold IRA accounts, another creative giving tool is known as a qualified charitable distribution (QCD). This allows donors to make a contribution directly to a charity or church from their taxable IRA instead of taking the required minimum distribution, a move that can have tax benefits. There are some limitations, but for donors who have to take mandatory IRA distributions even if they don’t need or want the funds, this can be an excellent tool to fund generosity.
Segment your members age 70 and above (who are most likely in the position of managing mandatory IRA distributions) and consider an informative communication to them outlining the benefits of a QCD. While it’s ideal to do this near year-end, keeping this tool in front of those entering that phase of life will be important year-round.
There are experts in these creative giving tools who can assist your church, and ACS Technologies is glad to talk with you and connect you to the best resources.
Finally, a word about cash giving that is time-sensitive for year-end. Several CARES Act provisions – temporary tax changes that benefit individuals who give to charity – were extended through 2021.
Donors who itemize their deductions can now give more cash to charity before reaching their adjusted gross income (AGI) limitation. The CARES Act raised the prior 60% limitation for cash contributions to certain public charities to 100% of an individual’s AGI. Donor giving beyond this 100% limitation also may be carried forward for the next five tax years.
The extension of CARES Act provisions through 2021 also benefits donors who do not itemize their deductions. The CARES Act allows for up to $300 of a taxpayer’s charitable contributions to qualify as an above-the-line deduction. It also increases the amount to $600 for married couples filing joint returns. This means donors don’t have to itemize deductions in order to claim the $300 (or $600) as a deduction. Qualifying donations must be made in cash.
Many of your church’s members may not be aware of these CARES Act charitable giving tax benefits. This can make a timely and important year-end message for your congregation, especially because we don’t know what 2022 will hold and these increases may go away.
Next up, we’ll look closely at building your church’s endowment and the tools planned/estate giving can offer your stewardship program.
Tim Smith has over 30 years of experience in Church, Non-Profit Administration, Management, and Fund Development. Serving as an Executive Pastor and Chief Development Officer in growing Churches and Non-Profit Organizations has provided a wide range of expertise and resources. Tim serves as Founder and CEO for Non-Profit DNA, a boutique firm committed to helping nonprofits and churches build their capacity through fundraising, leadership, team building, staff recruiting, and coaching.